Gartner ITxpo: SaaS purchasing decisions 'are bypassing IT'

Three-quarters of all software as a service (SaaS) has been bought by business unit managers rather than IT managers, Gartner research vice-president Ben Pring has warned.

Tash Shifrin
November 5, 2007

Share

Twitter

Facebook

LinkedIn

Three-quarters of all software as a service (SaaS) has been bought by business unit managers rather than IT managers, Gartner research vice-president Ben Pring has warned.

Pring urged IT managers to “get involved in the decision” to buy SaaS, warning: “SaaS is happening in your organisations whether you like it or not.”

The SaaS model was gaining currency because it attacked the “unsustainable world” of traditional client-server enterprise software, Pring told delegates at Gartner’s symposium in Cannes, France.

“There are some inconvenient truths in our industry,” he said, describing the “very high levels of unused software” in enterprises as the “guilty secret of the IT industry”.

Pring said 65% of Siebel licences sold before Oracle took over the vendor “were never put into use”, while server utilisation was also low – at an average 18% in large organisations. He added that the “one to 10” ratio that meant companies were spending 10 times as much on implementation and systems integration as on software licences had “really got out of alignment”.

SaaS offered a challenge to this “era of profitable dysfunction”, Pring argued, adding: “Salesforce.com has proved the SaaS concept. They’ve proved that this works.”

Pring said SaaS offered a number of benefits: businesses could pay for the functionality they actually needed and pay from operational rather than capital budgets – allowing greater flexibility. Users did not have to worry about infrastructure support or managing the software, he added.

SaaS was also cheaper in the medium term and deployment was speedy - it was “much easier, quicker and simpler to get this stuff into your organisation”, Pring said.

But he also warned that SaaS had downsides. Software licences were no longer assets on the user’s books, while IT managers worried that they had less control of the application portfolio.

Security and managing relations with supplier companies could also present challenges while integrating SaaS with existing on-premise software “will continue to be very complicated”, Pring warned.

Although little is yet known about the long-term implications of the SaaS model, it might prove to be “more expensive in the long-term”, as with leasing rather than buying a car, Pring warned.

The fact that businesses were adopting SaaS anyway made it essential that IT managers get involved in the decision, bringing their expertise to bear, Pring urged.

IT managers should look for SaaS products that combined a user-friendly front-end with a “very robust, very industrial” underlying system, “real processing power with a very simple interface”.

Buyers should also look for a SaaS platform rather than a standalone application to allow future development through third-party applications, with minimal integration and application management challenges. “The real benefit will come from SaaS when you buy a platform,” Pring said.